NAR Responds to '60 Minutes' Real Estate Segment that 'Misses the Mark'
May 14, 2007 -- In the world of political campaigns, it's a standard ploy to set the stage with an empty chair when one candidate refuses to debate his opponents.
The CBS show "60 Minutes" gave the National Assn. of REALTORS® the empty chair treatment in a May 13 segment that examined the impact of online brokerages on the real estate industry. The show featured interviews with a representative from the now-defunct eRealty and the president and CEO of Redfin, but no one from NAR, even though NAR twice offered and prepared Association spokespersons for interviews with Leslie Stahl. It was CBS that made the decision it would rather interview our opponents and let them make unanswered -- and inaccurate and unfair -- accusations about REALTORS® and NAR policies.
The one-sided journalism and egregious errors served no one well, especially the once-vaunted news magazine show. NAR staff spent nearly a year working with CBS, briefing producers on the issues involved. The producers attended the REALTORS® Conference in New Orleans and met with NAR's legal counsel for half a day in Chicago. Still the segment was full of major errors.
NAR is in communication with 60 Minutes about its unbalanced reporting and presentation of misinformation and will be sending the CBS network a letter demanding an opportunity to correct these errors and misrepresentations.
Here are some examples of the misinformation:
Error: The six percent commission is "sacrosanct."
Fact: All commissions are negotiable. The average commission rate is not 6 percent, but 5.1 percent, according to Real Trends.
Error: NAR is the industry's "governing body."
Fact: NAR is a trade association. It does not govern the industry.
Error: In 2003, NAR issued new rules of its own that threatened to block Internet discounters' access to the MLS.
Fact: The Virtual Office Website policy did not block access to MLSs for discounters or any other brokers who are members of the MLS.
Error: The MLS is the database that lists virtually every home for sale in the country.
Fact: There is no single national MLS. Rather, there are more than 900 local and regional multiple listing services. These are not simply "databases" but the private exchange of offers of cooperation and compensation between real estate brokers.
Error: Eight states have "minimum service laws" that require REALTORS® to provide a level of service many Internet discounters can't afford.
Fact: "REALTOR®" is a trademarked term and should never be used synonymously with "real estate agent." The intent of minimum service laws is to ensure consumers receive a minimal level of service from licensees.
Error: The brokerage industry has a powerful lobby. Eleven states flatly prohibit rebates.
Fact: The intent of anti-rebate laws is to prevent kickbacks in real estate transactions, not to limit brokers' incentives to attract customers.
The brokerage industry does not lobby for anti-rebate laws.
Other key points 60 Minutes misrepresented or overlooked:
- NAR supports all business models and favors none. Our 1.3 million members include REALTORS® who work on a full-service basis, as well as those who consider themselves to be limited service, fee-for-service, minimum service, and discounters. We think it's great that consumers have a choice today.
- The real estate industry has harnessed technology for the benefit of consumers and will continue to do so. Real estate is both high-tech and high-touch, so can be enhanced by both electronic and personal interaction.
- There is no such thing as a "standard commission." Commissions are negotiable, and prices vary. The fact is that commission rates have decreased 16 percent from 1991 to 2004 (source: Real Trends).
- The real estate business is unique in that competitors must also cooperate with each other to ensure a successful transaction, and MLS systems facilitate that cooperation. The first MLS was created more than 100 years ago as a way for brokers to share their listing agreements with each another in hopes of procuring buyers for their properties more quickly and efficiently than they could on their own.
- The MLS is a tool to help listing brokers find cooperative buyer brokers to help sell their clients' homes. Without the collaborative incentive of the existing MLS, brokers would create their separate systems, fragmenting rather than consolidating property information.